NEW YORK ( TheStreet) -- For investors who are rightly impatient with an anemic banking sector, TheStreet has compiled a list of 10 bank stocks priced under $5 with the most upside, based on consensus price targets.

Several names on the list are speculative, with large price declines over the past year, as common stakes were diluted through large capital raises and the banks worked to pare down nonperforming loans and repossessed real estate.

For many of the names, the risk and potential rewards are reflected in aggressive price targets, even among analysts with neutral ratings on the shares.

Citigroup ( C) left the ranks of the "under $5 club" after the market close on May 6, when the shares underwent a 1-for-10 reverse split. Since then, through Wednesday's close at $40.33, the shares had declined 11%.

To come up with our list we looked at all U.S. bank stocks priced below $5 at Wednesday's market close, excluding those traded on the PinkSheets and those with three-month average daily trading volume below 50,000 shares. All data was provided by SNL Financial.

Here are the 10 bank stocks under $5 with the most upside potential, based on consensus price targets among analysts polled by FactSet:

10. United Community Banks

Shares of United Community Banks ( UCBI) of Blairsville, Ga., closed at $2.08 Wednesday, down 56% from a year earlier. Based on a mean 12-month price target of $2.55 among analysts polled by FactSet, the shares have 23% upside.

The company had $7.6 billion in total assets as of March 31, with over 100 branches in Georgia, western North Carolina and east Tennessee.

United Community owes $180 million in government bailout funds received through the Troubled Assets Relief Program.

The company raised $380 million in equity during the first quarter, selling $32.9 million in common shares and $347.1 million in mandatorily convertible preferred shares to a group of investors led by Corsair Capital LLC. The conversion will be subject to a shareholder vote on June 16.

The shareholders will also be asked to approve a 1-for-5 reverse split at that time, as CEO Jimmy Tallent said during a conference call following United Community's earnings announcement on April 28 that the company would have a total of almost 290 common shares after the conversion, which would be "simply too many shares for a company our size."

United Community reported a first-quarter net loss from continuing operations of $142.5 million, or $1.57 a share, compared to an operating loss of $33.3 million, or 39 cents a share, a year earlier. The first-quarter results included a $190 million provision for loan losses, as the company adopted an "aggressive asset disposition plan to quickly sell and write down problem assets," following the private equity offering.

United Community charged-off $231.6 million in troubled assets during the first quarter. As of March 31, the company was left with $138 million in nonperforming assets, declining from $417 million a year earlier. The March 31 ratio of nonperforming assets to total assets was 1.73%.

Tallent also said that following the capital raise and problem asset disposition, United Community was in compliance with a memorandum of understanding the company had entered into with the Federal Deposit Insurance Corp. and state regulators.

Following the bank's first-quarter earnings announcement, Guggenheim Securities analyst Jeff Davis said his firm expected United Community to "post moderate profitability going forward," and that based on management's previous comments, the company would look to make acquisitions, since it wouldn't be able to "generate much growth on its own given the state of its core north GA market.

Davis's price target for the shares is $2.25.

Out of eight analysts covering United Community, one rates the shares a buy, while the remaining analysts all have neutral ratings.

9. Flagstar Bancorp

Shares of Flagstar Bancorp ( FBC) of Troy, Mich., closed at $1.40 Wednesday, declining 71% from a year earlier. Based on a consensus price target of $1.73, the shares have 24% upside potential.

The company had $13.1 billion in total assets as of March 31, operating 162 branches in Michigan, Indiana and in Georgia.

Flagstar owes $266.7 million in TARP money. The company raised $703.7 million in common equity during 2010, according to SNL.

In April, Assured Guaranty ( AGO) sued Flagstar for "failure to cure or repurchase defective" securitized home equity loans, accusing Flagstar of making "widespread misrepresentations" on an "overwhelming proportion" of the $600 million in loans that were securitized and insured in 2005 and 2006, Assured said it had paid out $82.4 million in claims against the two Flagstar home equity pools and faced "tens of millions of dollars" in future claims.

Flagstar said it had recorded contingent liabilities for the securities pools, of which $3.4 million remained as of March 31.

Flagstar also said it would "vigorously defend itself against the suit brought by Assured," and had "provided detailed rebuttals" to Assured Guaranty's demands.

SNL reported that on May 10, Assured Guaranty CEO Dominic Frederico said that his company's $1.1 billion mortgage putback settlement with Bank of America ( BAC) would allow Assured to devote more resources to its pursuit of claims against Flagstar, as well as UBS AG ( UBS), Credit Suisse ( CS) and JPMorgan Chase ( JPM).

Flagstar reported a first-quarter net loss to common shareholders of $31.7 million, or 6 cents a share, compared to a loss of $81.9 million, or $1.05 a share a year earlier. The first-quarter provision for loan losses was $28.3 million, narrowing from $63.6 million a year earlier.

Following the first-quarter earnings announcement, FBR Capital Markets analyst Paul Miller upgraded his rating on Flagstar's shares to "outperform," or a "buy," with a $2.00 price target, based on a "burn-down tangible book value (TBV) of $2.20 per share after accounting for possible additional asset sales, a ($0.16) hit to TBV, and a deferred tax asset benefit of $0.61, assuming the company can repay TARP with cash."

The other three analysts covering Flagstar all have neutral ratings on the shares.

8. Synovus Financial

Shares of Synovus Financial ( SNV) of Columbus, Ga., closed at $2.36 Wednesday, declining 11% from a year earlier. Based on a consensus price target of $2.97, the shares have 26% upside potential.

Synovus had $28.7 billion in total assets as of March 31, with over 300 branches in Georgia, Alabama, South Carolina, Florida and Tennessee.

The company owes $968 million in TARP money and raised $1.1 billion in common equity during 2010, according to SNL.

Synovus reported a first-quarter net loss attributable to common shareholders of $93.7 million, or 12 cents a share, compared to a loss of $229.8 million, or 47 cents a share, in the first quarter of 2010. The first-quarter provision for loan losses was $141.7 million, declining from $340.9 million a year earlier.

Following the earnings release, Christopher Marinac of FIG Partners reiterated his neutral rating on the shares, with a $3.13 price target, estimating another $1 billion in credit losses and saying that his firm continues to expect "real profits are a 2012 event and that late 2011 shows break-even EPS, at best."

Jeff Davis of Guggenheim Securities is also neutral on the shares, with a $2.50 price target, saying "sufficient parent liquidity and bank-level capital imply staying power for SNV until, we assume, the board decides to sell in 12-24 months."

Out of 23 analysts covering Synovus, five rate the shares a buy, 15 have neutral ratings and three analysts recommend investors take a powder.

7. Wilshire Bancorp

Shares of Wilshire Bancorp ( WIBC) of Los Angeles closed at $3.19 Wednesday, down 70% from a year earlier. Based on a consensus price target of $4.15, the shares have potential upside of 30%.

The company had $2.8 billion in total assets as of March 31, with 24 branchs in Southern California, Texas, New Jersey, and the New York City area, and six loan production offices in n Colorado, Georgia, Texas (two offices), New Jersey, and Virginia.

Wilshire Bancorp owes $62.2 million in TARP money. On May 11, the priced a $100 million public offering of common shares at $2.75 a share.

The offering followed a May 6 memorandum of understanding with the Federal Deposit Insurance Corp. and state regulators, under which main subsidiary Wilshire State Bank agreed to maintain a Tier 1 leverage ratio of at least 10%. The bank subsidiary's Tier 1 leverage ratio was 8.08% as of March 31.

Wilshire concluded an internal investigation during the first quarter, which "included loan related activities and other matters involving improper activities of a certain loan officer," who is no longer employed by the company.

The "lack of supervision and oversight by management, and the deficiencies in loan underwriting, approvals, renewals and asset sales" discovered in the investigation, "reduced fourth-quarter net income of the Company by $10.3 million," and also contributed to a first-quarter net loss.

Following the investigation, CEO Joanne Kim resigned, and was immediately replaced by Jae Whan Yoo.

Wilshire Bancorp reported a first-quarter net loss to common shareholders of $52.1 million, or $1.77 a share, compared to net income to common shareholders of $2.4 million, or 8 cents a share, in the first quarter of 2010. The main factor in the first-quarter loss was $38.1 million in tax expenses, as the company wrote-down deferred tax assets.

The first-quarter provision for loan losses was $44.8 million, more than double the $17 million a year earlier, but down from $83.6 million in the fourth quarter. During the first quarter, the company took write-downs on $94 million in portfolio loans that reclassified as held-for-sale.

On May 17, Timoth Coffey of FIG Partners upgraded the shares to a buy rating with a $3.65 price target, saying "as the company produces sustainable levels of profitability (greater than nominal amounts) and charge-offs start to decline, the company is likely to reverse the $38.1 million valuation allowance on Deferred Tax Assets." Coffey says this reversal is likely to take place in 2013, but "should results in 2011 be better than expected, the reversal could occur as early as second half of 2012."

Three of the seven analysts covering Wilshire Bancorp rate the shares a buy. The remaining analysts all have neutral ratings on the shares.

6. Intervest Bancshares

Intervest Bancshares ( IBCA) of New York has seen its stock fall 47% over the past year, closing Wednesday at $2.90. Based on Sandler O'Neill's price target of $4.00, the shares have 38% upside.

The company had $2 billion in total assets as of March 31, operating through its main office in New York and six branches in Pinellas County, Fla.

Intervest owes $25 million in TARP money and has deferred its last five quarterly dividend payments on preferred shares held by the government. The company raised $27 million in common equity during 2010, according to SNL Financial.

The company's main subsidiary Intervest National Bank is operating under a formal agreement with the Office of the Comptroller of the Currency, under which the subsidiary is required to maintain Tier 1 leverage, Tier 1 risk-based and total risk-based capital ratios of 9%, 10% and 12%, respectively. These ratios were 10.04%, 13.55% and 14.81% as of March 31.

The holding company reported first-quarter net income available to common shareholders of $1.7 million, or 8 cents a share, compared to a net loss to common shareholders of $2.9 million, or 35 cents a share, in the first quarter of 2010. The first-quarter provision for loan losses declined to $2 million, from $9.6 million a year earlier.

Michael Sarcone of Sandler O'Neill is the sole analyst covering Intervest Bancshares. Sarcone reiterated his "buy" rating for Intervest with a $4.00 price target, based primarily on valuation, since the shares were trading for $2.82 or just "37% of tangible book value per share," on April 12 when the analyst's report was published.

Sarcone estimates that Intervest will earn 26 cents a share for 2011 and 28 cents a share in 2012.

5. Doral Financial

Shares of Doral Financial ( DRL) of San Juan, Puerto Rico, closed at $1.83 Wednesday, declining 31% from a year earlier. Based on a consensus price target of $2.63, the shares have 43% upside.

The company had $8.5 billion in total assets as of March 31, with 34 branches, all in Puerto Rico.

First-quarter net income attributable to common shareholders was $909 thousand, or a penny a share, compared to $21.2 million, or 34 cents a share, in the first quarter of 2010, when a net $26.6 million was credited to retained earnings when the carrying value of converted preferred shares exceeded the value of common stock issued to complete the conversion.

On an operating basis, Doral earned $3.3 million during the first quarter, compared to a net loss of $3.5 million a year earlier. The first-quarter provision for loan losses declined to $2.6 million, from $13.9 million a year earlier.

On May 20, B. Riley analyst Joe Gladue reiterated his "buy" rating for Doral Financial with a $3.75 price target, saying that "despite returning to profitability in 1Q11, the stock still trades at less than 50% of tangible book value," adding that the company could "sustain operating profitability and this accomplishment raises the possibility of reversing some of the reserve against the deferred tax asset that amounts to roughly $2.70 per common share."

The other two analysts covering Doral Financial have neutral ratings on the shares.

4. Park Sterling

Shares of Park Sterling Corp. ( PSTB) closed at $4.72 Wednesday, down 36% from a year earlier. Based on a consensus price target of $6.92, the shares have 47% upside.

The company had $628 million in total assets as of March 31. Its main subsidiary Park Sterling Bank was organized in September 2006.

The holding company is expanding, after raising $150 million in common equity last August.

Park Sterling agreed in March to acquire Community Capital Corp. ( CPBK) of Greenwood, S.C., for $32.4 million in cash and stock. Community Capital had $649 million in total assets as of March 31, with 18 branches located throughout South Carolina. The merger is expected to be completed during the third quarter.

Park Sterling's CEO James Cherry said when the deal was announced that the combined company would "work together to build an $8 to $10 billion community banking franchise in the Carolinas and Virginia."

Park Sterling posted a first-quarter net loss of $2.9 million, or 10 cents a share, compared to net income of $1578 thousand, or 3 cents a share, a year earlier. Earnings continued to drag as the company worked through its problem loans. The first-quarter provision for loan losses was $4.5 million, rising from $1.5 million in the first quarter of 2010, but declining from a peak of $8.2 million in the fourth quarter.

KBW analyst Jefferson Harralson rates Park Sterling "outperform" with a $6.75 price target, saying in January that he anticipated a merger deal, and that the company was holding "an open and active dialog with 5 or 6 target banks."

All three analysts covering Park Sterling Corp. rate the shares a buy.

3. Citizens Republic Bancorp

Shares of Citizens Republic Bancorp ( CRBC) of Flint, Mich., closed at $0.80 Wednesday, down 18% from a year earlier. Based on a consensus price target of $1.20, the shares have 50% upside potential.

The company had $9.7 billion in total assets as of March 31, with over 200 branches in Michigan, Wisconsin, Ohio, and Indiana. Total assets declined 17% a year earlier, mainly from the sale of its F&M Bank-Iowa subsidiary in April 2010.

Citizens Republic owes $300 million in TARP money, having deferred its last five quarterly dividend payments on preferred shares held by the government.

The company reported a first-quarter net loss to common shareholders of $74.3 million, or 19 cents a share, compared to a loss of $90.3 million, or 21 cents a share, in the first quarter of 2010. The first-quarter provision for loans losses was $88.7 million, declining from $101.4 million a year earlier.

Nonperforming assets totaled $188 million as of March 31, declining 34% from the previous quarter, and 66% from a year earlier. The ratio of nonperforming assets to total assets was 1.93%. The company charged-off $161 million in problem loans during the first quarter.

On May 2, Oppenheimer analyst Terry McEvoy reiterated his "outperform" or buy rating on the shares, with a $1.40 price target, saying his firm believed Citizens Republic would return to "consistent profitability" during the second half of 2011.

On May 3, John Barber of KBW reiterated his neutral rating on the shares with a $1.00 price target, saying that with improvement in Citizens Republic's asset quality, "returning to profitability and recapturing the deferred tax asset are two meaningful events that could act as catalysts for the shares."

The four analysts covering Citizens Republic are evenly split between buy and hold ratings.

2. Popular, Inc.

Shares of Popular Inc. ( BPOP) of Hato Rey, Puerto Rico, closed at $2.79 Wednesday, down 5% from a year earlier. Based on the consensus price target of 4.40, the shares have 58% upside potential.

The company had $38.7 billion in total assets as of March 31, operating over 180 branches in Puerto Rico, with eight branches in the Virgin Islands and one branch in New York.

Popular owes $935 million in TARP money, having converted the preferred shares held by the Treasury to trust-preferred shares in the third quarter of 2009.

First-quarter net income to applicable to common stock was $9.2 million, or a penny a share, compared to a loss of $85.1 million, or 13 cents a share, in the first quarter of 2010. The provision for loan losses declined to $75.3 million, from $240.2 million a year earlier.

Pre-provision net revenue for the first quarter was $232.7 million according to SNL, increasing 41% from a year earlier, mainly because of the expansion from the purchase of the failed Westernbank from the FDIC in May 2010, which strengthened Popular's leading position in its home market.

Derek Hewett of KBW rates the shares "outperform" or "buy," with a $4.50 price target, saying that his firm believed that Popular would "not need to raise new common equity when they eventually return TARP."

Joe Gladue of B. Riley also has a buy rating on the shares, with a $4.75 target, saying in an April 26 report that "the company has solidified its capital base, and it appears to be turning the corner on asset quality," and that his price target for Popular is "based on a 12.5x multiple applied to 2012 EPS estimate of $0.41 discounted back to March 31, 2012."

Four of the five analysts covering Popular rate the shares a buy. The remaining analyst has a neutral rating.

1. Tennessee Commerce Bancorp

Shares of Tennessee Commerce Bancorp ( TNCC) of Franklin closed at $2.44 Wednesday, down 72% from a year earlier. Based on a mean price target of $4.67 among analysts polled by FactSet, the shares have 91% upside potential.

The company had $1.5 billion in total assets as of March 31, operating from a single location and focusing on providing services to small-to-medium sized businesses in its local market.

Tennessee Commerce owes $30 million in TARP money and raised $26.2 million in common equity through a public offering in August 2010.

The company reported a first-quarter net loss to common shareholders of $3.2 million, or 26 cents a share, compared to net income available to common shareholders of $1.4 million, or 24 cents a share, in the first quarter of 2010. The first-quarter provision for loan losses was $8.9 million, increasing from $4.6 million a year earlier.

The increased provision for loan losses in the first quarter included an additional $5 million resulting from an examination of main subsidiary Tennessee Commerce Bank by Tennessee regulators and the FDIC, which the company said in an April 18 filing with the Securities and Exchange Commission, "takes the position that certain of the Company's previous 2010 financial statements should be restated to increase the allowance for loan and lease losses."

In its first-quarter earnings release on April 29, Tennessee Commerce also said it expected that regulators would "seek higher capital ratios, likely increasing our minimum total risk-based capital ratio to 12.00%, our tier 1 capital to 11.00%, and our tier 1 leverage capital to 9.00%." For the holding company, these ratios were 12.19%, 10.93% and 9.73% as of March 31.

On May 9, Christopher Marinac of FIG Partners cut his rating on Tennessee Commerce to a neutral rating of "market perform," from "outperform," with a price target of $4.00, saying that "As time passes, this stock should be worth $4 to $5 again thanks to stabilizing book value above $6.00 and deposits worth over $2.00 per share." The analyst added that "new confidence in management and their ability to execute a strategy to satisfy regulators and reduce Classified Loans and repossessed assets," is needed "before investors bid up these shares."

Even with the downgrade, Marinac's $4 target implies 64% upside for the shares.

All four analysts covering Tennessee Commerce Bancorp rate the shares a buy.

>>To see these stocks in action, visit the 10 Bank Stocks Under $5 portfolio on Stockpickr.

-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

To follow the writer on Twitter, go to http://twitter.com/PhilipvanDoorn.

To submit a news tip, send an email to: tips@thestreet.com.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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